EDITORIAL: Perry's pet funds should be fixed up or finished off

By Enterprise editorial staff

Published 4:00 am, Friday, August 15, 2014

When Rick Perry departs the governor's mansion after 14 long years, his successor and the next Legislature will finally have a chance to take an honest look at two of his pet projects - the Emerging Technology Fund and the Enterprise Fund and the hundreds of millions they cost. Both sound good in theory but have often not worked out as planned. At a minimum they should be drastically reformed so taxpayers have a clear understanding of their gains and losses, and investment dollars go to deserving businesses, not politically connected friends of the governor.

Of the two, the Enterprise Fund has a better record. It is designed to attract startups and relocating companies to Texas, and it was said to have helped bring the Toyota headquarters from California to Plano this year.

Yet some even those high-profile successes could be misleading. The reality is that when companies are planning to invest millions of dollars, they base their decisions on a variety of factors. Rarely will this complicated process be swayed by some tax breaks or government loans that actually comprise a small portion of the big picture. Yet those "incentives" remove badly-needed tax dollars from the state budget and encourage other businesses to seek similar goodies.

The Emerging Technology Fund has come under even more criticism, even by Republicans at a House hearing this week. One bad example is a biotechnology firm called American Stem Cell that was promised up to $2.5 million to come to Texas in 2009. The Associated Press has reported that its CEO and employees still live in California, and its San Antonio "headquarters" is a horse pasture.

Worst of all, it's hard for taxpayers or even lawmakers to get a clear idea of the state's return on investment with the fund because those details don't have to be disclosed. The governor can cherry-pick the numbers to trumpet the wins and bury the losses.

That's unacceptable. Both funds need operational transparency and tighter controls. Otherwise they should be shut down, and state government can get out of the business of trying to pick winners and losers in a constantly changing economy.